Posts Tagged ‘profit’

Its important to not only achieve profit, its the time period in which you can achieve it in.

For small business – this doesn’t seem obvious at first.

You need to become successful and profitable NOW, not next year, and definately not ‘one-day’.

You need to make the hard decisions, make the big changes, and have your success now.

If you wait, and go slow, your life will dribble away, and your business will just be wasting your time.

So when you are planning – move the horizon to something closer, make it immediate.

A lot of this depends on the owner of the business to implement, and its the old “work in the business, versus working on the business’. I think you need 30%-60% of your time spent working ‘on the business’ – being planning strategy, marketing, and working with partners etc.

If you are a public company, you have shareholders demanding profit this year, so generally there is a mandate to get things done. If you are privately owned, you can just wonder around, with little or no growth if you don’t get stuck into the changes now.

If its worth doing, is worth planning,
if its worth planning its worth doing,
if its worth doing its worth doing NOW.

Bring those plans sooner and faster. Bring the profit NOW.

In order to achieve sooner and faster you need:
– time – reorganise your time to work on the business (see above)
– skills – for planning growth, marketing, branding, sales – perhaps outsource some of this
– motivation / inspiration

At each stage, there is opportunities for smart entrepreneurs. These opportunities are both with that product, and with adjacent products and services.

You should identify where you and your products are. If they are about to go through some of these inflection points.

I really believe there are opportunity if you are first to commoditize a product. You dont want to be a competitor in a commoditized market. But if you take someone else’s market, and commoditize it on them …. now that has some profit potential.

Some of this parallels what I have observed from open source software, and how it competes with commercial software. Open source software cant compete with all of the features, or all of the support of commercial software. So when the price is high, and the market smallish, open source doesn’t have a chance. It when the market expands, and features are less important, and support is less important, then open source can more easily compete. Clearly the commercial software guys can’t compete once price approaches zero, but open source, and SaaS can compete at those levels.

I see lots of opportunity for SaaS and commoditing products/markets. So long at there is already wide adoption, its a product that is well understood, you can help push the price towards zero and make some money on the way.

OK – one of the most brilliant marketing strategies is bundling …. or ‘meal deals’.

Think about what they did for Macca’s. Instead of selling burgers for say $3, chips for $2, and drinks for $2 – they sell a ‘meal deal’ for $5.50. You essentially get chips OR the drink for nearly free.

Instead of sometimes only selling a burger($3), or sometimes a burger + drink ($5), they more often sell a ‘meal deal’ for $5.50. Macca’s ends up with a higher average sale price. On average they sell more to each customer.

So what if you have ‘bundled services’ or ‘bundled products’ in your company? Perhaps you’ll increase the average sale. GREAT – we are getting more profit.

WRONG. What if the customer say doesn’t want or doesn’t respect part of your bundle.
– at best you will have increased your cost to deliver that sale (lowering your profit).
– at worst, they wont buy from you, as there is part of the offer they are not interested in
– overtime, you have increased your costs, and will disincent customers to buy from you …. not good

‘Blue Ocean Strategy’ clearly says you can attack a market by ripping out unloved features, and reducing costs. (I’ll write up a full review of Blue Ocean Strategy at some stage).

A simple solution would be to offer the components of your service seperately. And be proud of each component, talk highly of each of them. And ask the customer what components THEY want.

Its easy for sales people to think ‘if I put MORE value into the deal’ the customer might be more likely to buy.

Don’t sell them anything they dont want, or dont value. It will just end up a cost to you, and disincenting your customers.

Eventually bad deals, with too much cost, will destroy your company.

If you were smart, and to push the envelope, you have a bundle on offer, that is MORE than the some of the parts.